The majority of Minnesota investors make their stock market investment decisions largely on the basis of their “gut feelings” about what to own over the long term.
The problem is that most individual investors are not investment professionals. For that reason, most individuals have absolutely no business making investment decisions based on their limited investment management experience.
My teen age daughter can tell real designer clothes versus cheap versions of the same product. Even at her young age, my daughter is an experienced and analytical shopper of merchandise. She can make better retail merchandise buying decisions than I can because that is her area of expertise and experience. Her shopping intuition and analytical ability are far superior to mine.
Lawyers know more about the law; doctors know more about health issues; and life insurance agents know the cheapest and best life insurance to own. Everyone is an expert in their own profession today.
In the Malcolm Gladwell book Blink, the author writes about the fact that experts have a depth and breadth of knowledge that helps them make snap judgments that are often very accurate. He also states that the gut reactions of novices are not based on the same body of knowledge.
Is it then any wonder that most of the investment management decisions made by non professional investors are more likely to be wrong over the long-term?
Anyone can get lucky on what to buy or when to sell stock market investments over the very short term. But the more times investment management decisions need to be made, the more likely it is that those decisions will pale in performance to those of an investment professional.
With the U.S. stock markets more volatile again, it might be a good idea to think about getting a second opinion on what you current own from an experienced investment professional. Understand the amount of stock market risk you are taking now before you have to make your next stock market decision.
Ric Lager
Lager & Company, Inc
